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Walmart makes social media acquisition

M&A is back in full-force in the consumer internet space, but this
time around, it’s not just the usual suspects — tech companies — doing
the buying.

Case in point: yesterday, Walmart announced that it is buying social
media company Kosmix. Founded in 2005, the company, which raised $55m in
investment over the years, “filters social media to connect you to
content that interests.“

On the surface, Walmart’s acquisition is head-scratching. What can Walmart possibly do with a company perhaps best-known for its property Tweetbeat, which is “a real-time source for what people are saying about any major event“?

According to Kosmix CEO Anand Rajaraman, the answer is ‘a lot.’ He explains on his blog:

At Kosmix, we’ve been building a platform, called the Social Genome, to organize this data deluge by adding a layer of semantic understanding. Conversations in social media revolve around “social elements” such as people, places, topics, products, and events.

For example, when I tweet “Loved Angelina Jolie in Salt,” the tweet connects me (a user) to Angelia Jolie (an actress) and SALT (a movie). By analyzing the huge volume of data produced every day on social media, the Social Genome builds rich profiles of users, topics, products, places, and events.

He goes on:

Quite a few of us at Kosmix have backgrounds in ecommerce, having worked at companies such as Amazon.com and eBay. As we worked on the Social Genome platform, it became apparent to us that this platform could transform ecommerce by providing an unprecedented level of understanding about customers and products, going well beyond purchase data. The Social Genome enables us to take search, personalization and recommendations to the next level.

In other words, Walmart is not really acquiring Kosmix for its ‘social media‘ prowess, but rather for its technology, which Walmart will clearly try to apply to the world of ecommerce.

It will be interesting to see how Walmart does this, and while it’s far too early to judge the merits of the acquisition, it actually wouldn’t be surprising to see more acquisitions like this.

Many of the things being done in the social media analytics space are resulting in the development of technologies that analyze large amounts of data, and which could be applied to other industries. In some cases, it’s even quite possible that some of the companies producing technologies will find that the opportunities outside of social media are far more lucrative.

Recommended

I recently contributed a chapter to a book on social media, in which I wrote about the development of the social media industry and how I believe it will develop (available in all good bookstores at some point, apparently).

Once I’d finished writing this chapter, being the mildly obsessive type of guy I am, I continued to read into industry analysis and management theories, which eventually led to digging out my copy of Michael Porter’s Competitive Advantage.

Then, during a particularly dull train journey, I decided to look at how you could apply Porter’s Five Forces to the social media industry and agencies within the industry (I’ve been intentionally generic as I think the application fits with the industry as a whole, rather than any individual organisation).

Digital marketing is thriving in the Middle East, according to new research published today by Econsultancy and supported by ArabianBusiness.com. The survey-based research has found that companies are spending 22% of their marketing budget on digital.

Companies are using a wide range of digital channels for marketing, and investment in online is expected to increase across the board. Encouragingly, over half of companies (58%) are increasing their digital budgets in 2011.

However, the market is still very much in its infancy, and still faces major barriers to investment. Company culture, a reliance on traditional marketing, and a lack of knowledge are preventing companies from investing further money into digital.

This post looks at the current state of digital marketing in the Middle East, and some of the trends covered in our latest report.

April 8th 201114:41

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